Vtech Holdings Limited · HKEX:303
Vtech — FY2021 Earnings Presentation
39 slides from Vtech's earnings presentation, May 18, 2021
Slide 1: VTech Holdings Limited FY2021 Annual Results Announcement
VTech Holdings Limited FY2021 Annual Results Announcement 18 May 2021
Slide 2: Financial Review
vtech Financial Review >> > >> >INNOVATION BEYOND TECHNOLOGY 9
Slide 3: Financial Highlights
Financial Highlights For the year ended 31 March (US$ M) 2021 2020 Change Revenue 2,372.3 2,165.5 9.5% Gross Profit 726.6 663.6 9.5% Gross Profit Margin % 30.6% 30.6% -- Operating Profit 266.2 219.7 21.2% Operating Profit Margin % 11.2% 10.1% 1.1% pts Profit Attributable to Shareholders of the Compa
Slide 4: Revenue by Region
Revenue by Region For the year ended 31 March (US$ M) 2021 % 2020 Change North America 995.1 41.9 989.6 0.6% Europe 1,086.3 45.8 886.3 22.6% Asia Pacific 268.4 11.3 259.4 3.5% Other Regions 22.5 1.0 30.2 -25.5% Total 2,372.3 100.0 2,165.5 9.5% 4
Slide 5: Working Capital
Working Capital (US$ M) 31/03/21 31/03/20 Stocks 414.0 372.6 Stocks Turnover Days 103 days 102 days Trade Debtors 270.7 221.5 Trade Debtors Turnover Days 61 days 63 days 5
Slide 6: Liquidity Position
Liquidity Position (US$ M) 31/03/21 31/03/20 Deposits and Cash 343.8 242.5 Total Borrowings - - Net Cash Position 343.8 242.5 6
Slide 7: Operations Review
vtech Operations Review >> > >> >INNOVATION BEYOND TECHNOLOGY 7
Slide 8: Costs
Costs • Gross profit margin unchanged at 30.6% • Lower-than-expected gross profit margin was due to: Marked increase in materials prices in 4Q Change in product mix Rising freight costs Higher direct labour costs • These offset lower manufacturing overheads and further productivity improveme
Slide 9: Manufacturing Footprint
Manufacturing Footprint • Took a strategic step forward in expanding manufacturing base • Acquisition of QSC, LLC facility in Tecate, Mexico for professional loudspeakers completed on 1 April 2021 • Adds new product category to CMS and serves its customers better • First manufacturing base outside A
Slide 10: North America
North America Revenue by Product Line (US$ million) • Revenue rose 0.6% to US$995.1 million, ELPs 41.9% of Group revenue 536.9 (+8.8%) • Higher ELPs and TEL products sales offset lower CMS sales • ELPs revenue up 8.8% to US$536.9 million, with good growth in Canada Double-digit increase for VTech
Slide 11: North America (continued)
North America (continued) • Standalone Products: Higher sales of both brands LeapFrog: Especially robust growth Strong sell-through of preschool items offering overt educational value Blue’s Clues & You! series performed strongly LeapBuilders sales declined VTech: Rising sales of infant
Slide 12: North America (continued)
North America (continued) • Platform Products: Slight decrease for both brands VTech: Higher sales of Touch & Learn Activity Desk insufficient to compensate for lower sales of KidiZoom Smartwatches and KidiBuzz LeapFrog: Sales increases of educational tablets and Magic Adventures Globe offset
Slide 13: North America (continued)
North America (continued) • TEL products revenue increased 10.9% to US$270.5 million, driven by higher sales of residential phones, commercial phones and other telecommunication products • Strong sales increase to online retailers • Residential Phones: Market saw an uptick as consumers upgraded fi
Slide 14: North America (continued)
North America (continued) • Commercial Phones and Other Telecommunication Products: Best performers were products geared to staying at home Baby monitors: Performed especially well VTech strengthened position as no. 1 baby monitor brand in US and Canada Headsets and CareLine range of residen
Slide 15: North America (continued)
North America (continued) • CMS revenue down 25.5% to US$187.7 million • Lower sales for all product categories Professional audio: Demand for commercial professional audio products fell steeply as COVID-19 measures restricted large public gatherings Major customer experienced over-inventory T
Slide 16: North America (continued)
North America (continued) Industrial products: Sales decline on lower orders for coin and note recognition machines Solid-state lighting: Sales decrease on sharp fall in project-based bidding activity due to the pandemic Medical and health products: Lower orders for hearing aids, as COVID-19 r
Slide 17: Europe
Europe Revenue by Product Line (US$ million) • Revenue up 22.6% to US$1,086.3 million, 45.8% of Group revenue ELPs TEL 351.2 109.3 • Higher sales of ELPs and CMS offset (+5.4%) (-2.8%) lower TEL products revenue • ELPs revenue up 5.4% to US$351.2 million Growth slowed down in 2H as lockdowns force
Slide 18: Europe (continued)
Europe (continued) • Standalone Products: Higher sales for both brands VTech: Growth in electronic learning aids, KidiZoom cameras, other Kidi line products and Switch & Go Dinos offset declines in Toot-Toot family of products Sales of infant, toddler and preschool products largely stable Gr
Slide 19: Europe (continued)
Europe (continued) • Platform Products: Sales decrease as growth in LeapFrog products insufficient to offset decline in VTech products LeapFrog: Revenue increase driven by Magic Adventures Globe and interactive reading systems, offsetting declines in RockIt Twist and children’s educational table
Slide 20: Europe (continued)
Europe (continued) • TEL products revenue fell 2.8% to US$109.3 million Higher sales of commercial phones and other telecommunication products insufficient to offset lower residential phones sales • Residential Phones: Sells to major telephone companies in the region on ODM basis Sales decreas
Slide 21: Europe (continued)
Europe (continued) • Commercial Phones and Other Telecommunication Products: Sales increased as benefited by stay-at-home restrictions CAT-iq handsets, CareLine range of residential phones, IADs and headsets: Sales increase as consumers seeking to upgrade communication devices Baby monitors: S
Slide 22: Europe (continued)
Europe (continued) • CMS revenue rose 42.1% to US$625.8 million Higher sales of hearables, medical and health products, home appliances, communication products and automotive related products offset declines in professional audio equipment, IoT products and switching mode power supplies Hearable
Slide 23: Europe (continued)
Europe (continued) Communication products: Higher orders of Wi-Fi routers Automotive related products: Sales of smart battery chargers improved on good response to new product Professional audio: Lower sales, as growing demand for audio interface equipment for home use failed to offset lower o
Slide 24: Asia Pacific
Asia Pacific Revenue by Product Line (US$ million) • Revenue increased 3.5% to ELPs TEL US$268.4 million, 11.3% of Group 82.0 31.7 revenue (-1.4%) (+13.6%) • Higher sales of TEL products and CMS offset lower sales of ELPs • ELPs revenue decreased 1.4% to US$82.0 million, with growth in Australia off
Slide 25: Asia Pacific (continued)
Asia Pacific (continued) • Australia: Robust sales increase for VTech and LeapFrog products, with rising demand for educational toys Effective channel management drove online-to- offline sales higher Remained no. 1 manufacturer in infant and toddler toys category • Mainland China: Lower sales pr
Slide 26: Asia Pacific (continued)
Asia Pacific (continued) • TEL products revenue increased 13.6% to US$31.7 million, driven by higher sales in Australia, Japan and Hong Kong Australia: Growth mainly from baby monitors Hong Kong: Higher sales of IADs Japan: Higher residential phone sales as existing customer increased orders 2
Slide 27: Asia Pacific (continued)
Asia Pacific (continued) • CMS revenue up 4.3% to US$154.7 million • Growth in professional audio equipment and communication products offset lower sales of medical and health products and home appliances Professional audio: Increased sales of DJ equipment and acquisition of customer supplying USB
Slide 28: Other Regions
Other Regions Revenue by Product Line (US$ million) • Revenue down 25.5% to US$22.5 million, ELPs 1.0% of Group revenue 8.4 (-30.6%) • Lower sales at all three product lines • ELPs revenue down 30.6% to US$8.4 million. Higher sales in Africa offset by lower sales in Middle East and Latin America • T
Slide 29: Outlook
vtech Outlook >> > >> > INNOVATION BEYOND TECHNOLOGY 99
Slide 30: Towards a Sustainable Future
Towards a Sustainable Future • COVID-19 Response Top priority to protect health and safety of employees while fulfilling orders Ensure safe working environments at VTech’s locations worldwide Support children and local communities • Sustainable Products Set out pledge to replace fossil-based
Slide 31: Outlook
Outlook Group revenue for FY2022 hard to predict • All product lines have a solid order book, but despite VTech’s best efforts, fluid situation in global material supplies may affect ability to meet demand • There is general shortage of electronic components worldwide, in particular semiconductors a
Slide 32: Outlook
Outlook • Gross profit margin expected to decline: Higher materials prices owing to tight supply Rising freight costs Stronger RMB • VTech has taken steps to mitigate these effects: Diversifying sources of supply Re-engineering products Negotiating new shipping contracts Price increase
Slide 33: Outlook: ELPs
Outlook ELPs • Focus on maintaining positive momentum through new product launches globally and return to growth in Asia Pacific • Platform Products: VTech: Launch new versions of KidiZoom Smartwatch, KidiBuzz and Touch & Learn Activity Desk LeapFrog: Introduce refreshed LeapStart reading system
Slide 34: Outlook
Outlook • Standalone Products: VTech: Additions to core infant, toddler and preschool ranges; expansion of KidiZoom camera, Kidi lines and launch of Marble Rush; new models of Go! Go! Cory Carson, new content on Netflix LeapFrog: More items to Blue’s Clues & You! line and Learning Friends 100 Wo
Slide 35: Outlook: TEL products
Outlook TEL products • Launch new products catering to continued demand for residential phones and other telecommunication products, as well as recovery in commercial phones market • Residential Phones: Sales will benefit from a series of new products, notably premium work-from- home desktop cordl
Slide 36: Outlook
Outlook • Other Telecommunication Products: Launch Wi-Fi 6 IADs with dual WAN connection via 4G LTE LeapFrog smart Wi-Fi baby monitor, incorporating health monitoring and baby care app features • Commercial Phones: New range of Snom products targeting work-from-anywhere users Hotel phones to
Slide 37: Outlook: CMS
Outlook CMS • Increased demand in most product categories • Critical situation of global material supplies may impact ability to meet orders • New Mexican facility will contribute to FY2022 revenue through producing QSC branded professional loudspeakers • Utilisation to rise gradually as new custome
Slide 38: Q&A
vtech Q&A >> > >> > INNOVATION BEYOND TECHNOLOGY 3g
Slide 39: Thank You
vtech Thank You >> > >> > INNOVATION BEYOND TECHNOLOGY 39